Correlation Between HANOVER INSURANCE and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both HANOVER INSURANCE and Molina Healthcare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HANOVER INSURANCE and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HANOVER INSURANCE and Molina Healthcare, you can compare the effects of market volatilities on HANOVER INSURANCE and Molina Healthcare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HANOVER INSURANCE with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HANOVER INSURANCE and Molina Healthcare.
Diversification Opportunities for HANOVER INSURANCE and Molina Healthcare
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HANOVER and Molina is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HANOVER INSURANCE and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and HANOVER INSURANCE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HANOVER INSURANCE are associated (or correlated) with Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of HANOVER INSURANCE i.e., HANOVER INSURANCE and Molina Healthcare go up and down completely randomly.
Pair Corralation between HANOVER INSURANCE and Molina Healthcare
Assuming the 90 days trading horizon HANOVER INSURANCE is expected to under-perform the Molina Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, HANOVER INSURANCE is 1.32 times less risky than Molina Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The Molina Healthcare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28,100 in Molina Healthcare on October 26, 2024 and sell it today you would earn a total of 1,050 from holding Molina Healthcare or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HANOVER INSURANCE vs. Molina Healthcare
Performance |
| Timeline |
| HANOVER INSURANCE |
| Molina Healthcare |
HANOVER INSURANCE and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HANOVER INSURANCE and Molina Healthcare
The main advantage of trading using opposite HANOVER INSURANCE and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANOVER INSURANCE position performs unexpectedly, Molina Healthcare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.| HANOVER INSURANCE vs. Wayside Technology Group | HANOVER INSURANCE vs. PEPTONIC MEDICAL | HANOVER INSURANCE vs. X FAB Silicon Foundries | HANOVER INSURANCE vs. CREO MEDICAL GRP |
| Molina Healthcare vs. Hanison Construction Holdings | Molina Healthcare vs. HANOVER INSURANCE | Molina Healthcare vs. QBE Insurance Group | Molina Healthcare vs. UNIQA INSURANCE GR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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